AFD China's Case Study on one precedent case for Bad Influences under Article 10.1(8) of Trademark Law

2015-01-31

In China the first-to-file rule is adopted for trademark registration for encouraging right-owners to seek protection for their mark as earlier as possible. This, however, also causes such problems that some individuals or companies might file applications before the Chinese Trademark Office for some famous marks that are actually owned but not filed for Chinese trademark applications by foreign entities.

In many cases, when foreign entities try to seek protection for their marks in China, it might be too late since the marks probably have been registered or applied for registrations by others. In some cases, it is almost impossible for foreign entities to get back the marks from such preemptive registrations unless they could prove a bad faith factor as well as a certain fame factor to request a protection under Article 32 (Article 31, in 2001 revision) against such unfair pre-emptive registration.

In practice, however, to prove the two factors, bad faith and certain fame, would be extremely hard if the foreign entities have never appeared, and ever used their marks in Chinese market before the filing dates of the infringes’ applications, since certain fame factor requires use of the mark and certain fame obtained in Chinese market. Then other than the bad faith claim, other approaches should be found.

AFD represents a case where use evidence of our client’s mark in Chinese market is very limited. After being informed that someone has our client’s mark registered in China, we quickly researched and collected evidence of that party (an entity in Yiwu, Zhejian Province)’s 99 filings in several similar classes for registration of famous marks owned by others as bad faith evidence and also of some recognition of our client’s mark in Chinese webpages in internet. With all available evidence we filed, before the deadline, an opposition for our client against that party’s registration application, in which, among others, we analyzed each of the factors for determining illegally pre-emptive registration of another’s mark having certain fame under Article 32 and also alleged that the pre-emptive registration of another’s mark violates the principle of honesty and good faith in the society.

The Office ruled against our client but in favor of the Yiwu entity, and held that the evidence submitted is insufficient to prove the certain fame of our client’s mark and trade name obtained in Chinese market. Thus our grounds, the Yiwu entity’s illegally pre-emptive registration is in the bad faith, they violate our client’s right on its trade name, and the pre-emptive registration of the Yiwu entity violates the principle of honesty and good faith in the society, do not work since the fame of the mark and trade name obtained in Chinese market could not be proved by limited evidence.

After further researched, we discovered that the very entity has registered hundreds of trademarks in the dozen classes of goods and services including mass trademarks whose characters are the same as those of famous brands of foreign clothes or cosmetics.

We also further researched on any further available approach and the related regulations. Our attention focused on the provisions of Article 10.1(8) of the Chinese Trademark Law. Article 10 is to list signs that are prohibited to use, and the item 8 prescribes that signs detrimental to social morals or customs or having other bad influences shall not be used as trademarks.

Previously in practice, it has never been seen that the Trademark Office or Trademark Review and Adjudication Board accept such provisions for pre-emptive registration in bad faith. And this regulation has be used for only very limited and serious situations for anti-social morals or customs and serious bad influences on the society. Bad faith in registering a trademark of another is too small, too tiny, too little to be treated as bad influences.

But for this case, after our above grounds are not accepted, we did want to try the ground under Article 10.1(8) with respect to the evidence we had. Then we suggested the client try to appeal to the Board with such approach.

Then we filed a review before the Board against the decision of the Office for the opposition. Other than the ground for illegally pre-emptive registration of another’s mark having certain fame under Article 32 and other grounds, we added the ground under Article 10.1(8).

Finally the Board supported our ground for bad influences under Article 10.1(8) and ruled in favor of our client. This is significant to clients with similar situations.